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Yatala: An emerging area for industrial investment in the Gold Coast

Lisa Dunne

In the outer Northern Ring of the Gold Coast sits Yatala, an industrial area that is coming alive as a location for property investment. This is the domain of Lisa Dunne, team leader of Ray White Industrial M1 North and one of the country’s most elite agents who modestly attributes her success to good old-fashioned hard work:

“Success in real estate means hard work, long hours and getting to know your customers. Your stock is the key to success in real estate.”

Last year she recorded over $50 million worth of transactions – few people know the Yatala market better than she does. We spoke to her to gain an insight into the fast-growing Yatala industrial market, which has seen increasing investor activity recently.

An accessible investment option

Recent sales show that industrial real estate is affordable enough for even fledgeling investors. The four most recent buildings that have sold all went for under $410,000 and one was sold for only $222,500. Lisa commented that these investors are common in the Yatala market and are making their presence felt:

“We lost the mum and dad investors in the global financial crisis. They’re going for the low-end stock that’s affordable for them, through their super funds or businesses. That’s helping drive the prices up.”

Ray White Research suggests that, while large institutional owners are still present, owner occupiers and private investors are prevalent. Particularly in smaller units such as those described above, where rental yields are high and the costs of entry are relatively low.

Demand-driven supply pipeline

Despite increasing investor activity in the area, the supply pipeline remains demand-driven with a limited number of projects under development. Roughly 30,000 square metres of new industrial space have submitted their development applications (DA), while a further 61,270 square metres of space has been DA approved. Roughly 16,000 square metres is currently under construction with 14,000 set for completion in mid 2017.

Lisa suggested a reason for low supply was that developers are cautious following the Global Financial Crisis:

“Gold Coast was the first hit and last to recover through the GFC, so that’s why developers are still careful to oversupply. But there’s a lot of land that could expand Yatala’s industrial centre if demand keeps going like it is.”

With developers taking this cautious approach, vacancy rates should stay reasonably low in Yatala: a positive sign for the future of the market.

This may help drive capital growth and rent increases, as demand continues to heighten and investors take notice of the area’s promise.

Growth is spilling out from central Gold Coast

The wider Gold Coast area has seen considerable investment in infrastructure leading up to the Commonwealth Games in 2018. Additionally, the city has seen improvements to the light rail and medical facilities. This activity may have been a motivator for the increased investment in the area, which brought the economy back to life and reestablished the Gold Coast as a tourist hotspot.

If you can find a tenanted property with a long term lease in Yatala your investment could prove extremely solid.

These positive signs are likely a driver behind the reinvigoration of Yatala, as growth begins to spill out of the main centre affecting areas on the city’s fringe.

As a result of this stimulation, the area has seen average capital values rise by 5.69 per cent for the year ending September 2016.
The price range per m2 now varies from $1,200 to $1,900 and yields have been reported between 7.5 and 8.5 per cent.

If you can find a tenanted property with a long term lease in Yatala, your investment could prove extremely solid with such high yields.

The future for Yatala

Growing demand and low vacancy rates have helped push average rents up over the past two years. Since 2014 these increases have sat at almost 10 per cent per year, bringing the average cost per m2 to $118 for prime real estate and $80 to 100 for secondary.

Considering the current upwards trajectory of rents in the area and the market forces at play, it’s likely that these increases will continue in the near future. Lisa welcomes the changes in the market, suggesting that the area’s future is bright:

“It’s hard to tell what’s in the future as the market is changing so regularly. But we’d love to see more national and international industries come into the area. Overall, the signs are all positive and the future looks good for the Yatala industrial market.”

With the Commonwealth Games just around the corner and interest rates low, the prospects for the wider Gold Coast market’s future appear bright for investors. It’s likely that these favourable conditions will continue to influence Yatala’s industrial precinct driving future growth and keeping investor activity in the area high.